The Shadow Lobbyist

On the surface, the firms that represent thousands of businesses, trade associations and special interests are taking a beating.

In practice, however, the lobbying industry is moving below the radar. More than $3 billion is still spent annually, more of which is not being publicly disclosed. Corporate America is relying on new tactics to shape the legislative outcomes it wants.

The adoption of innovative practices by the influence industry, combined with legal reporting requirements that are full of loopholes, have created misleading indicators which suggest that there has been a decline in the clout of the lobbying sector.

In fact, lobbying techniques have evolved so as to elude the regulations that implement the 1995 Lobbying Disclosure Act. These regulations are revised every 6 months in “written guidance on LDA registration and reporting requirements” issued by the Clerk of the House and The Secretary of the Senate.

Lobbyists and their lawyers are capitalizing on arcane gaps in regulatory guidelines. For example, constricted definitions of lobbying contained in Congressional regulations have been construed to exempt from disclosure money spent on grass roots mobilization; on television, digital and social media campaigns; and on public relations efforts to build support among voters and key elites.

With these exemptions not counted, an analysis of annual lobbying revenues shows that after increasing by 153.3 percent between 1998 and 2010 (from $1.4 billion to $3.55 billion), disclosed fees have dropped by $250 million, to $3.3 billion in 2012.

At some of the top firms, reported drops have been dramatic.

Barbour, Griffith & Rogers, which was founded by Haley Barbour, a former chairman of the Republican National Committee and a former governor of Mississippi, has experienced a fall in lobbying revenues, as recorded by the Center for Responsive Politics (see Figure 1). They went from $22.3 million in 2007 to $13.8 million in 2012, a 38.1 percent decline.

Fig. 1

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Credit OpenSecrets.Org

Half a mile away from BGR, another firm that saw tremendous growth from its founding in 2000 to 2007, QGA, now reports lobbying revenues in a nosedive. QGA was created by Ed Gillespie, who also once ran the Republican National Committee and who has been a key adviser to Republican presidential campaigns, and Jack Quinn, a top adviser to former Vice President Al Gore.

According to the Center for Responsive Politics (see Figure 2), QGA’s revenues went from $16.3 million in 2008 to $6.8 million in 2012, a 58.3 percent decline.

Fig. 2

Photo

Credit OpenSecrets.Org

Increasingly sophisticated forms of political engagement on both the left and the right have outrun old forms of regulation. Most recently, the success of the Obama campaign in advancing computer-driven techniques to reach key segments of the electorate has produced a blossoming industry of digital and specialized communications firms using data analysis, microtechnology and computerized list-building to create public support for or opposition to legislative and policy initiatives – virtually all of which goes effectively undisclosed.

There are other factors pushing lobbying activity into the shadows. Obama administration regulations bar any lobbyist hired by the executive branch from participation “in any particular matter involving specific parties that is directly and substantially related” to a “former employer or former clients, including regulations and contracts”; they prohibit the appointment of lobbyists to federal boards and commissions; and they restrict former federal appointees from lobbying for two years after leaving federal employment.

Taken together, these regulations have encouraged those interested in public service to find jobs that do not require them to register as lobbyists. Or, put another way, those who are eager for government work are not going to formally register themselves as lobbyists and thus make themselves ineligible.

You can’t just roll into a member of Congress, buy a couple of steaks, to get a tax provision.

At the same time, in part because the administration has painted such a dark picture of lobbying, corporations are seeking alternative mechanisms to achieve their legislative and regulatory goals without public disclosure of their expenditures.

The enhanced ability of web sites like the Center for Responsive Politics and the Sunlight Foundation — both of which many reporters and columnists, including me, have relied on to provide data on lobbying expenditures — has, in turn, increased the likelihood that undisguised corporate spending will receive unwanted publicity.

To address diminishing revenues, lobbying firms have created their own public relations operations, subsidiaries with the same goals as the lobbying arm, that charge similarly high fees, but which do not have to be publicly reported to either the House or the Senate.

The BRG Group, for example, created BGR Public Relations. The firm’s web site provides the following background:

When our firm started more than two decades ago, clients didn’t want help with the media as part of our service. Now, almost every client wants – and needs – public relations advice. BGR Public Relations fulfills that need in a big and unique way. Led by veteran TV and print journalist Jeff Birnbaum [a former Washington Post and Wall Street Journal reporter and the co-author of Showdown at Gucci Gulch], BGR PR specializes in offering counsel in a way that sets it apart. Jeff and his team can explain how reporters think – and how they decide what news is from their perspective – in ways that conventional PR people simply cannot.

Our founding principle – that every public policy issue is at its core a communications challenge – is even truer today. This is why at QGA you’ll find people who are among Washington’s most credible and connected, bipartisan government relations and strategic communications professionals.

“You can’t just roll into a member of Congress, buy a couple of steaks, to get a tax provision,” Feehery told me in a phone interview. He described the basic public relations approach as “setting up an echo chamber to help frame messages,” by, among other things, creating web sites for the client, seeking coverage of the client’s goals by the press, working with pollsters to develop a message and creating videos demonstrating the products or services the client can offer.

As an example of this work, Feehery cited Quinn Gillespie’s efforts in support of the Brazilian aircraft manufacturer, Embraer, which was competing with a U.S. company, Beechcraft, for a $950 million Pentagon contract to build 29 light attack aircraft for the Afghanistan National Army Air Corps.

In this case, Feehery said, with a foreign company competing with a domestic manufacturer on a military contract, it was important to cultivate a level of respect for the competence of Embraer in the broad military community, including not only officers, but contractors, think tank analysts and the extensive media that cover defense issues.

The campaign on behalf of Embraer was “aimed at the military, but it was also aimed at the people who talk about these things, who read the Pentagon newspapers, aviation magazines,” Feehery said.

The Internet has radically altered the lobbying arsenal.

The scope of the ongoing upheaval in lobbying was brought home with a vengeance in 2011 and 2012 by the failure of traditional lobbying strategies to win approval of the Stop Online Piracy Act. In early 2011, by all normal standards, the odds were with passage of SOPA.

The legislation had the backing of some of the most powerful companies and associations in Washington, including the American Bankers Association, the AFL-CIO, Americans for Tax Reform, Disney, the Teamsters, MasterCard, Visa, ESPN, the Motion Picture Association, the major TV networks and the US Chamber of Commerce.

In addition, the measure had strong bipartisan support in the House, including from Lamar Smith, Republican of Texas and chairman of the Judiciary Committee and many committee members. The parallel bill in the Senate, the Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act of 2011, had 42 Republican and Democratic Senate sponsors, including Patrick Leahy, Democrat of Vermont and chair of the Senate Judiciary Committee.

In a time of legislative gridlock, the Stop Online Piracy Act looked like a rare bipartisan breakthrough. The bill, known as SOPA, promised a brave new Internet — one cleansed of “rogue websites” that hawk pirated songs and movies as well as counterfeit goods. For Congress, the legislation’s goals amounted to a can’t-lose trifecta: uphold justice, protect legitimate businesses (and jobs!), and make the Web safer for law-abiding consumers. Who could be against that?

In a month, support for SOPA imploded and with it the world of the expense account lobbyist.

An anti-SOPA coalition abruptly burst on the scene towards the end of 2011 catching the SOPA backers by surprise. It included some high-dollar, high-tech corporations – Google, Facebook, Twitter, Yahoo – with the means to invest heavily in lobbying, traditional or otherwise.

Opposition to the bill quickly caught fire among the broader public. It was expressed in emails, text messages, voicemails, Twitter comments, Internet petitions and outspoken attacks at town hall meetings – none of which have to be reported as lobbying-related.

Backers began to jump ship. In January of 2012, seven House members withdrew sponsorship, and 10 Senators followed suit. Florida Republican Senator Marco Rubio, one of the bill’s sponsors, announced on Facebook:

Earlier this year, this bill passed the Senate Judiciary Committee unanimously and without controversy. Since then, we’ve heard legitimate concerns about the impact the bill could have on access to the Internet and about a potentially unreasonable expansion of the federal government’s power to impact the Internet. Congress should listen and avoid rushing through a bill that could have many unintended consequences.

Congressman Dennis Ross, Republican of Florida and a cosponsor of the bill, tweeted matter of factly, “#SOPA is dead.”

The emergence of a powerful public force outside traditional avenues of influence put fear of elective defeat into the hearts of members of Congress and forced the lobbying community to beef up its own non-traditional tactics.

Now, in the lexicon of Washington insiders, the acronym SOPA has become a verb, as in the warning to overconfident legislators: “Don’t get SOPAed.”

Anita Dunn, former director of communications in the Obama White House and now a managing director of the Democratic strategic consulting firm, SKDKnickerbocker, said in a phone interview that “the public dialogue has become more important in influencing the climate in which decisions are made.”

Dunn pointed out that the universe of gatekeepers deciding what the public will know about the legislative process is no longer limited to “a very narrow group of people, editors and the members [of Congress].”

Instead, she said, the new media – including social media — means almost anyone “can shine a light on” Congressional negotiations, so that company or association pushing an issue can no longer depend on the effectiveness of an old-guard lobbyist with good connections on Capitol Hill. “If someone decided to lift an issue into the public dialogue, you have to be prepared to have that dialogue,” Dunn said, which in turn suggests that the hiring of a strategic communications firm like SKDKnickerbocker to prepare “an active communication and PR strategy” is a good idea.

Dunn argues that the work she and others do at SKDKnickerbocker is not in fact lobbying. “We do not lobby,” she told me. “We work closely on teams with government relations people” from other firms.

This avoidance of activities falling under the legal definition of lobbying allows SKDKnickerbocker and its clients to minimize publicity concerning work both would perhaps like to keep out of public view.

The liberal-leaning website, Republic Report, has pointed to a number of SKDKnickerbocker’s controversial activities, many in direct opposition to the Obama agenda, including:

Pressing the Department of Education to weaken proposed tough regulations of the for-profit colleges run by Kaplan Education that were profiting from government loans to students who were not equipped to complete programs and get degrees.

Coordinating the campaign for Win American, a coalition of corporations seeking to avoid up to $1 trillion in taxes when they repatriate overseas income.

While SKDKnickerbocker has done well in the new legislative environment, according to Dunn, she noted that the most explosive growth in the field of lobbying is taking place in the use of digital technology to mobilize and direct public and elite opinion.

Two of the most prominent are Democratic firms that grew out of past presidential campaigns: Blue State Digital, which was founded by a handful of the online specialists in Howard Dean’s 2004 campaign, and Bully Pulpit Interactive, which was started by veterans of Obama’s 2008 campaign.

On the Bully Pulpit web site, Jen Nedeau, a director of the company, argues there is a strong overlap between political and commercial digital advertising:

By using data-driven ads to craft a narrative, we believe that social media does not only have the ability to sell soap, but as we’ve already proven, it can help to get out the vote – and at least in 2012, that is one action that has certainly made a difference.

Modesty is no virtue in the world of client acquisition, and Blue State Digital exhibits none. On its web site, the firm boasts:

Blue State Digital helps clients create change – in their own organizations, in the marketplace, and in society. We do work that matters – building authentic relationships and activating audiences, raising awareness and raising money.

The company does not stop there. “Every agency promises results,” it says. “We create behavior.”

Blue State’s clients run the gamut from corporations like HBO, Ford, AT&T and Google to unions and trade associations like the Communications Workers of American, UNITE, to non profits like the Jewish Federation.

The market value of Blue State and Bully Pulpit has been demonstrated by the decision of major public relations conglomerates to gobble up Blue State and hire away Andrew Bleeker, founder of Bully Pulpit.

On Dec. 30, 2010, Blue State announced that it had been acquired by “the world’s largest communications services group,” WPP. Less than a month later, on Jan. 14, 2011, Hill+Knowlton Strategies, a WPP subsidiary and a long-term member of Washington’s PR establishment, announced the hiring of Bully Pulpit’s Bleeker. “My goal is to extend the next generation of digital public relations to H+K Strategies’ clients,” Bleeker declared.

There is another way to interpret these developments. The seemingly venturesome high tech and strategic consulting firms in the field of influencing public opinion are headed toward a more traditional business-as-usual role as they and their top personnel are acquired by massive multinational corporations.

The growing network of “strategic communications,” digital practitioners and the newly created PR subsidiaries of old-line lobbying firms is, in effect, supplanting special pleaders’ traditional tactics while simultaneously enhancing their ability to operate out of the limelight. Many of the activities most people would call lobbying now fall outside of its legal definition. They have become a large but almost invisible part of special interest influence on public policy.

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Tom Edsall, a professor of journalism at Columbia University, is the author, most recently, of “The Age of Austerity.” His column on demographic and strategic trends in American politics appears every Wednesday. During the year leading up to the 2012 elections, he wrote for The Times as a weekly contributor to Campaign Stops. He covered American politics at The Washington Post from 1981 to 2006, and before that at The Baltimore Sun and The Providence Journal. He has written four other books: “Building Red America,” “Chain Reaction: The Impact of Race, Rights, and Taxes on American Politics,” “Power and Money: Writing About Politics” and “The New Politics of Inequality.” He splits his time between Washington and New York.